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Crime" and since last October the Commissioners have been considering the various responses that were made to it. Talking of which, I wonder if they can understand why one of the bodies to respond was the Government of the Peoples Republic of China? Still, by the time the Commission finally get around to publishing some firm legislative proposals, perhaps hacking will once again be in fashion. It could happen. After all, according to a recent survey on American fads in "The Economist" magazine, even that relic of the Seventies - the skateboard - looks set to make a return during 1987.

Movieman . . . . .

One of the more interesting court cases to pop up at the tail end of last year was the Derby Crown Court prosecution of Messrs Atkinson and AIIsop, two software dealers who had devised a novel tax evasion program. Called "Movieman" - its prime market was the video hire trade - the system appeared to be a legitimate sales records and book-keeping package. However, it contained an additional facility making it possible to maintain two parallel sets of records. One was a confidential record of the true state of trade, whilst the other - the supposedly official - version, automatically produced a suppressed set of sales figures for VAT and Inland Revenue purposes. After being alerted by a tip-off, it took the authorities nearly two weeks to crack the code to the secret "patch" within the system. So far the Customs & Excise have recovered just short of £35,000 from nine traders who are known to have used the suppression feature - although the full extent of the fraud is believed to be in excess of £100,000.

As for the authors? According to the prosecution the two men - who traded as Impact Microcomputer Services - sold "Movieman" and its built-in "dishonest facility" to about 120 video retailers in the UK at prices varying from £5000 to £7000 per system. Despite having been caught and pleading guilty to "conspiracy to incite the commission of false accounting", this "nice little earner" from Impact will no doubt make the men's nine-month suspended jail sentences and £1000 fines a little easier to live with.

. . . . . Meets Fuzzbuster However, apart from its own merits, the case also raises the interesting issue of just what is the general responsibility of developers of software programs for the uses to which their products are subsequently put? "Movieman" appears to have been conceived from the outset

as a way of "cooking the books". But what about spreadsheet software - this is an ideal tool for eradicating give-away anomalies in a set of bogus figures? As a result of the Derby case, fears have been expressed in the popular computing press to the effect that a precedent has been set which could make even legitimate software houses and dealers responsible for the purposes to which users put their programs. Pessimists should take heart from experiences in the USA with radar detectors used to warn in advance of police speed traps. Known as "Fuzzbusters", these devices look set to enjoy record sales in 1987. Faced with this development, two states have already banned their use. But, when Congress considered imposing a federal ban at the close of the last session, the proposals encountered such intense lobbying that the legislation was dropped. If it is not possible to outlaw even such blatant law evading devices as the Fuzzbuster, then it looks as if the software industry has nothing to worry about with regard to the misuse of its legitimate products.

Tales of caution Finally, two cautionary tales. From a fairly conventional source - Ted Cluff, the secretary general of the Institute of Data Processing - comes the story (told in the latest edition of his book "Computerisation for Smal/Business") of a DP manager who was very proud of his fire-proof safe which was to store computer tapes and disks. He was even more proud one morning when he arrived at work and discovered that although a fire had ravaged through the building, his safe was still in tact. Pride however comes before the fall, and his fall came with the realisation that the safe's key - normally hung on a nail beside the safe - had been reduced to a twisted lump of metal. A perhaps more surprising source for a cautionary tale is the Clarenceux King-of-Arms, Great Britain's second most senior herald. In a recent letter to "The Times" he lamented the fact that when he dictates correspondence at home on an audio tape, by the time it reaches his secretary at the College of Arms, the Post Office's electronic sorting equipment has completely erased its contents leaving just a blank tape. Obviously the age of chivalry is dead.

Charles Christian, Report Correspondent

LAW REPORTS UPDATE

T H E F O L L O W I N G IS A N U P D A T E OF R E C E N T D E C I S I O N S IN T H E U S C O U R T S

Microcode is copyrightable NEC Group et al v. Intel Corp. (U.S. District Court for the Northern District of California, 1986). District Judge William A. Ingram has now rulled in the case reported in (1986/87) 4 CLSR 26 that microcode is the subject of copyright under U.S. law. This is the first case of its kind where a court has so ruled, although the case is somewhat unsatisfactory since there was little analysis of how the Judge reached such a conclusion. A further ruling on the issue may

therefore be required before the matter can be regarded as settled. The case began in December 1984 when NEC filed for a declaratory judgement that Intel's 8086•88 microcode copyrights were invalid and/or not infringed by the anticipated sale of the NEC V20 and V30 chips in the U.S. A year earlier Intel and NEC had entered into an agreement which licensed NEC to use the copyrights in Intel's microcode but not, it seems, in NEC's V series of micro-processors. The result was the law suit alleging that Inters copyrights were invalid and/or not infringed. The court's ruling only deals with the question of copyrightability of Inters microcode. It did not rule on the

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question of whether NEC has infringed that copyright. Copyright protection for microcode continued to remain in doubt despite the Apple v. Franklin decision in 1983 that removed so many of the initial controversies about the legality of copyright protection for software. Among the reasons for this was the view that microcode, since it performed a utilitarian function in controlling the operations of a micro- processor, should not be eligible for protection. A further consideration was that since microcode is located in the control section of a computer, it could be said to function more as part of a machine than as machine language itself. It was part of NEC's argument that microcode should not be regarded as computer software at all since it was more related to engineering than to an act of authorship. It is, of course, a fact that Intel had obtained registration certificates for its microcode. This clearly would have affected the court's approach to the issue as it provided at least prima facie support for Intel's position. The following conclusions can be drawn from the judgement:

• Intel's microcode are programs within the definition of the U.S. Copyright Act 1976,

• Storage of those programs in a read-only-memory device and more particularly in the control section of the computer does not make it a machine part.

• The writing of microcode is a creative endeavour.

• The loading of microcode into a ROM is accomplished in the same way as one would load an applications program into such a device.

• The same methods are used in the development of microcode as would be employed in the writing of any computer program.

The conclusion of the court must be right given the recent history of decisions which have extended copyright to functional works. The court's ruling on whether NEC is guilty of infringing Intel's copyright is now awaited. The court has granted NEC the opportunity to present evidence that it legitimately reverse-engineered Intel's micro-processor without copying any protected element in the copyrighted microcode. NEC will seek to show that any resultant duplication is as a result of the merger of the unprotected idea with the expression and that therefore no infringing act has occurred.

"Look and feel" issue takes off

There are at least two cases before the U.S. Courts at the moment dealing with copyright in the look and feel of a computer program. The first case is Broderbund v. Unison World (U.S. District Court for the Northern District of California, 1986). The plaintiffs marketed a program, originally written for the Apple computer, called "Print Shop". The defendants after having had some negotiations with Broderbund about producing a version of Print Shop for the IBM PC, prepared its own IBM program by the name of "Printmaster". The screen output of the defendant's program was visually very similar to that of the plaintiffs but there was no evidence that the underlying source or object code had been copied. The defendants did admit that they had seen the plaintiff's program but they had only had very brief access to the source code and therefore could not have infringed the copyright. In effect what they had done was to take the plaintiff's ideas and use them in the development of a new and better program. The court rejected the defendant's arguments which have become quite familiar by now namely that the idea and expression of the Print Shop software were indistinguishable from one

another and that the audio-visual display was utilitarian in nature. On the question of substantial similarity, the court relied heavily on Welan v. Jaslow and ruled that: "mere lists of similarities cannot adequately convey the impression of overall similarity between "Print Shop" and "Printmaster". No ordinary observer could reasonably conclude that the expression of the ideas underlying these two programs were not substantially similar. Put simply, Printmaster looks like a copy of Print Shop with a few embellishments scattered about in no particular order. The "total concept and feel" of these programs is virtually ident ica l . . , compelling a finding that their expression is substantially similar". The second case is that of Plains Cotton Cooperative Association v. Goodpasture (U.S. Court of Appeals for the Fifth Circuit, 1986). The case began when the appellant alleged copyright and trade secrets infringement in its "Telcot" system which allows farmers and buyers of cotton to do so electronically. The appellants argued that the defendants had developed a similar product by recruiting some of the appellant's personnel who had had access to their proprietary material. The main difference between the two products was that the appelant's system was designed to run on a mainframe whereas the defendant's program was written to work with personal computers used as terminals. Relying on the Whelan v. Jaslow approach, the plaintiffs argued that copyrightability went well beyond the literal code of the software, to include structure. On this occasion the court at first instance denied a preliminary injunction to the plaintiffs on the basis, it seems, that they had not established verbatum copying of their product. The plaintiffs are appealing, arguing that the District Court used an improper legal standard in evaluating their copyright claims by construing "copy" to mean a verbatum copy. According to the appellants "the District court's terse order reflects the fact that the District Court applied a more restrictive standard and looked only for verbatum copying from a program/isting'~ In their petition to the Appeal Court, the appellants remarked: "the second wave of computer software copyright cases is now breaking. These • . . raise the crucia/ question of where the dividing fine ties in computer software between protectable expression and unprotectable ideas. Herein the question may be simply put - what constitutes "copying"?" The essence of the appellant's claim is that computer software, being a very structured process, requires the programmer to make choices as to how to implement its functionality: what functions are allocated among what routines, what data structures are used, what algorithms and techniques are used within each routine to implement that routine's assigned functions. All these factors are protectable expression and the court should so hold. The result of the appeal is now awaited.

Copyright and data Two Appeal Court decisions have caught the eye recently on the question of copyright and data. The first, Koontz v. Jaffarian (U.S. Court of Appeals for the Fourth Circuit, 1986) concerned copyright protection for a data compilation which appeared both in manual and on accompanying computer tape. The plaintiffs had for thirty years been in the business of preparing estimates for electrical work in construction projects and back in 1962 had begun preparing a manual that could be used by electrical contractors to prepare bids. At the heart of the manual was a comprehensive data compilation showing the number of hours of labour required to install various electrical items. It contained a listing of over 57,000

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items used in electrical construction showing the price of each item and the amount of time necessary to install it. Prior to 1976, the plaintiffs had prepared estimates by hand using the manual. Using the construction plans, the plaintiffs would first determine the various materials needed to complete the job and would then go through the manual and assign code numbers, page numbers and quantities for each item. The plaintiffs then gave this information to a secretary who added up the cost and labour hours listed in the manual for each item to come up with a final estimate. In 1976 the plaintiffs and Hewlett Packard (H-P) entered into an agreement to computerise the steps necessary to develop an estimate from the manual. The plaintiffs worked with an H-P programmer and provided the procedural step-by-step information needed to write the electrical estimating computer program. The program and significant portions of the data compilation from the plaintiffs' 1975 manual were then stored on magnetic tape. With this customer could obtain an estimate using a H-P computer in the same way that the plaintiffs had obtained estimates by hand. H-P marketed this product as an electrical estimating package which included the plaintiffs' 1975 manual. The relationship terminated in 1977 after attempts to market the product proved largely unsuccessful. Subsequently the plaintiffs formed a joint venture with another to improve the package. Updates were issued but no copyright notice was included in the software package. The plaintiffs had, however, registered a copyright on the revised 1979 manual. The defendant had performed electrical estimating work for the plaintiffs in the past and after the termination of the joint venture in 1982 began creating an electrical estimating package to compete with that of the plaintiffs. The co- defendant who had been part of the joint venture supplied Jaffarian with a copy of the electrical estimating software as updated in 1979. The data supplied by the plaintiffs and stored in the software was then printed out and used by the defendants to develop their own manual. Koontz filed a copyright infringement suit against Jaffarian who counter claimed for a declaration of copyright invalidity and non- infringement, unfair competition and tortious interference with the defendant's business relations. After consideration the District Court dismissed all of the claims except for Koontz's infringement claim. It held that Koontz's copyrights were valid and had been infringed by the defendants. The defendants argued that they were free to copy from the plaintiff's data compilation contained in the software because there was no copyright notice on the software as required by U.S. copyright law (17 USC s.401 1982). Koontz replied that his manual was copyrighted and so under the "unit publication" doctrine, the tapes or disks on which the database and program were stored, were also protected by copyright. The unit publication doctrine provides that affixation of the copyright notice to one element of the publication containing various elements gives copyright protection to all elements of the publication where the elements are integral or essential parts of one another. Although not physically connected the software, hardware and manual were always sold and intended to be sold as a unit. Since the average customer could not use the software without a manual, the manual was, for all intents and purposes, the instruction sheet for the use of the software. Since the defendants were "not innocents misled by an omission of a copyright notice on the software" the application of the unit publication doctrine under these circumstances was inherently fair and reasonable. The judgement of the District Court was therefore affirmed.

The second case, West Publishing Co. v. Mead Data Central Inc. (U.S. Court of Appeals for the Eighth Circuit, 1986) involved West Publishing Co.'s page numbering system which Mead Data Corporation (MDC) sought to use as part of a database enhancement on its on-line LEXIS service. For more than a century, West had been compiling and reporting opinions of state and federal courts publishing these opinions in a series of books known as the "National Reporter System". Before it published an opinion, West would check the accuracy of case and statutory citations in the opinion and add parallel citations with head-notes and a synopsis of the opinion arranging it in West's style and format. West would then assign its report of each opinion to one of the individual series in the National Reporter System. This would be based on the court and/or the subject matter of the opinion. Further categorisation within each volume would then take place with indeces and tables of contents provided for each volume. West would then register a copyright claim with the Register of Copyrights and obtain a certificate of registration for each volume. MDC had since 1973 operated LEXIS, a computer assisted on-line legal research service. This, like West's National Reporter System, reports the decisions of state and federal courts. Since its beginning, MDC has included on the first computer screen of each LEXIS case report the citation to the first page of West's report of the opionion. West conceded that citation to the first page of its reports was a non-infringing "fair use" under 17 USC s.lOZ These citations were not therefore at issue in the case. In June 1985 however MDC announced that it planned to add "star pagination" to the text of opinions stored in the LEXIS database. This new service named the LEXIS Star Pagination Feature was to be available to LEXIS users by September or October 1985. This feature would insert page numbers from West's National Reporter System publication into the body of LEXlS reports providing " jump" or "pin-point" citations to the location in West's Reporter of the material viewed on LEXlS. Thus with the LEXlS Star Pagination Feature, LEXlS users would be able to determine the West page number corresponding to the portion of an opinion viewed on LEXlS without ever physically referring to the West publication in which the opinion appeared. The result of MDC announcement was this action in which West claimed inter alia that the MDC proposal amounted to an appropriation of West's comprehensive arrangement of case reports in violation of its copyright. At first instance the District Court held that there was a substantial likelihood that West's arrangements of case reports were protected by copyright law and that MDC copying of the pagination system constituted an infringement and was therefore not a fair use of West's copyrighted works. Mead Data contended on appeal that West was simply trying to copyright its page numbers but the Appeal Court rejected this saying that the arrangement West produced through this process was the result of a considerable amount of labour, talent and judgement. Although MDC had argued that the specific goal of the suit was to protect some of West's page numbers - those occurring within the body of individual court opinions, the protection for the numbers was not sought for their own sake:

"it is sought rather because access to these particular numbers - the ~ump cites' - would give users of LEXlS a large part of what West has spent so much labour and industry in compiling and would pro-tanto

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reduce anyone's need to buy West's books. The key to this case then is not whether numbers are copyrightable but whether the copyright on the books as a whole "is infringed by the unauthorised appropriation of these particular numbers . . . We therefore hold . . . that West's case arrangements, an important part of which is internal page citations, are original works of authorship entitled to copyright protection."

The Appeal Court then went on further to hold that MDC's proposed use of West's page numbers did infringe West's copyright in the arrangement. MDC was wrong in asserting that in enjoining its use of West's page numbers this was tantamount to giving West a copyright in the Arabic numbering system itself. Although it was true that some uses of a numbering system could not meet originality requirements for copyright, in this case the copyright involved was that of West's arrangement not its numbering system per se. MDC's use of West's page numbers was problematic "because it infringes West's copyrighted arrangement, not because the numbers themselves are copyrighted". Since West had shown a likelihood of success on the merits of its claim at trial, and taking into account the relative harm to MDC against the threat of irreparable harm to West, the public interest determined that West should be granted a preliminary injunction. The decision of the District Court was therefore affirmed.

PROGRESS OF RECENT CASES IN THE U.S. COURTSi IN BRIEF

Seattle Computer Products Inc. v. Microsoft Corp. (Superior Court, King County, Washington) Microsoft have agreed to pay $925000 in settlement of its lawsuit with Seattle Computer Products. Seattle had originally developed the QDOS operating system which it adapted for Microsoft for use with the 8086 microprocessor. In return, Seattle were given a 'nominal' cash payment, and a world-wide, non-exclusive, royalty-free licence to market the product, including updates, enhancements and revisions. Prior to trial, the judge had ruled that, with certain restrictions, Seattle were entitled to market the original operating system software (by then known as MS- DOS) and its direct descendants, used with the 8086 processor. The settlement came as the jury were considering precisely ~".,.-h upgraded versions of MS-DOS were considered to be direct descendants of the original system, which is used in the IBM-PC and its compatibiles. By the settlement, Microsoft are effectively buying back the licences granted in 1981. Cullinet Software Inc. v. McCormack & Dodge Corp. (Massachusetts Court of Appeal, 23 MA App.Ct., 231) In another case which turned on contractual ambiguity, it was ruled that the trial court judge erred when he found the terms of a 1981 software licence agreement between the parties to be clear and unambiguous. By the terms of the agreement, Cullinet were given the rights to market McCormack & Dodge's General Ledger Plus software in the U.S. and Canada for a period of five years. The agreement, however, went on to state that at the end of the five year term, Cullinet would automatically take an assignment of title to the software sufficient to enable them to use the sub-license it, "'in perpetuity, without fimitations." Cullinet claimed worldwide rights, but McCormack & Dodge argued that the expression "without l imitations" was merely a clarification of "in perpetuity" and did not apply to the geographical restriction to the U.S. and Canada.

The trial court judge supported the McCormack & Dodge view, but on appeal, the court examined the recitals clause in conjunction with the grant of rights, and concluded that there was a sufficient degree of ambiguity. The case was referred back to the lower court for an analysis of the intention of the parties at the time of the execution of the agreement. James A. Cummings Inc. v. Lotus Development Corp. This case promised to be an interesting test of the standard 'as is' type of disclaimers commonly found in software licences these days. Concern had been expressed however, lest this case would initiate a multitude of software liability actions. Cummings had used Lotus' Symphony spreadsheet software in preparing a $3 million office construction bid. They alleged that the figure of $254,000 had been entered and had appeared on the screen, but had not been added to the bid by the software. The bid was short by this amount, and Cummings consequently made a loss on the project and sought to recover the $254,000 loss from Lotus. It was recently announced, however, that Cummings had dropped the action. In a statement, Lotus claimed that any miscalculation of the bid was the result of user-error and not of any defect in the software. Activision Inc. et al. v. Softsave Information Services Inc. Seven of America's largest software houses (including Lotus, Microsoft and Ashton-Tate) have commenced an action for violation of copyright against a Vancouver software rental company which has been providing its members with 'preview' copies of application software. Softsave operates a club, whose members pay $10 for a 21 day rental of the software. At the end of this period, the members are asked to either purchase the software or to destroy it. It is believed that Softsave will not deny the copying allegations, but will argue that Canadian law does not give the kind of copyright protection claimed by the American companies. In the recent Canadian case of Apple Computer Inc. and Apple Canada Inc. v. Mackintosh Computers Ltd (1986-87 3 CLSR 30), the court found that a computer program, whether in object code or source code, is a "literary work" and is protected against unauthorised copying. Nevertheless, there is some doubt amongst computer law experts in Canada about the extent of protection. A White Paper was recently published which proposed amendments to Canada's 1924 Copyright Act, and it is expected that the government will this year enact legislation to clarify the scope of copyright protection for software. Dickerman Associates Inc. v. Tiverton Bottled Gas Co. (District of Massachussetts Court) Dickerman obtained judgement against a Tiverton employee for misappropriation of software trade secrets, but was unable to obtain satisfaction of the judgement from the employee concerned. They therefore sought to impose liability on his employer, Tiverton, for breach of a confidentiality clause in the original software licence agreement. Dickerman argued (a) that the contract created an absolute duty on the defendant to protect the program's confidentiality against misappropriation by its employees, or alternatively, (b) that the defendant was directly liable for the actions of its officers. The judge rejected both arguments. In respect of the former, he held that the promise to treat 'as confidential' imposed a duty to take reasonably diligent efforts to protect the object of the agreement. This Tiverton had done. Secondly, he held that whilst a corporation can only act through its officers, this did not make the officer the agent of the defendant for all the terms of the contract. Computer Associates International Inc. v, American

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